19.9.15

WHY BUSINESS ADMINISTRATION IS NOT APPLIED ECONOMICS.

Trump, the only one of the 15 candidates in Wednesday’s debates to appear publicly Tuesday in Southern California, assailed Obama on trade with Japan, China and Mexico, saying the leaders of all three countries were smarter and more cunning, a favorite comparison of his.

Japan’s “massive ships float right here and they drop off the cars, right?” he said, gesturing to the giant container vessels floating nearby. “They drop off thousands and thousands and thousands of cars. Millions of cars. And we sell them beef.”

The crowd erupted in laughter.

Yes, that's a standard feature of Donald J. Trump's campaign speech.

It's also a misconception shared by more than a few politicians, precisely because it appeals on some primitive level to constituents.

But the real cunning is being demonstrated by other entrepreneurs in the United States, who are able to produce cars by hiring immigrant labor to feed, slaughter, and pack the beef, and marshalling sufficient refrigerated containers to safely deliver the beef dockside.

It's called specialization and gains from trade, and the metaphor of producing cars on the range is in common use in economics classes, perhaps, though, in not yet enough economics classes to change voters' thinking about trade.

Nor does the concept of comparative advantage have enough purchase with the political press, who continue to chase Mr Trump's lesser gaffes.